Hedgehog (HH) signaling plays a critical role during embryogenesis and regulates early development of multiple tissues and organs, including the central nervous system. Although much has been revealed of the diverse functions of the HH signaling pathway, it is still unclear how the effects of altered HH signaling are interpreted by specific cell types. We have investigated the role of the HH transcription factor glioma-associated oncogene homolog 1 (GLI1) in the human Ntera2=D1 (NT2) embryonal carcinoma stem cell line. The study revealed that expression of GLI1 and its direct transcriptional target Patched (PTCH) is downregulated in the early stages of retinoic acid-induced neuronal differentiation of NT2 cells. To identify transcriptional targets of the HH transcription factor GLI1 in NT2 cells, we performed global expression profiling following GLI1 RNA interference (RNAi). Of the similar to 8500 transcripts represented on the microarrays, expression of 88 genes was downregulated and expression of 26 genes was upregulated. Nineteen of these genes are involved in cell cycle and proliferation. Further, GLI1 RNAi leads to a significant decrease in NT2 proliferation and changes expression of G1 phase cyclins. In conclusion, our results suggest that GLI1 is involved in cell cycle and proliferation control in the embryonal carcinoma stem cell line NT2.